There is growing consensus among policy makers and others that federal action would likely be required in order to avoid significant coverage disruptions if the Supreme Court this June rules in favor of the plaintiffs in King v. Burwell. Last week key lawmakers — Senators Hatch and Burr, along with Congressman Upton — unveiled an ACA replacement proposal. And a House working group comprised of key committee chairs is also working to craft an ACA alternative.
If King wins, the response could be a déjà vu of recent standoffs over the debt ceiling, where some Republicans sought to use the approaching debt ceiling or the need to pass a government funding bill to leverage changes to the ACA. Based on recent action and rhetoric from White House staff, we think President Obama is unwilling to compromise and is betting that Republicans won’t pass an alternative and voters will blame them for coverage disruptions.
Republicans are deeply divided over whether or how to fix the ACA, but their best bet for winning ACA concessions is to pass an alternative that forces President Obama to either veto the measure, whereby he may be blamed for coverage losses, or negotiate concessions in exchange for some sort of bridge or fix to the subsides.
We walk through the likely process and outline possible outcome scenarios from partial repeal and replace a la the Hatch proposal, to the possibility that there will be no federal fix and subsidies will stop in some states. Perhaps the most likely scenario is that Republicans ultimately agree to extend subsidies, very likely on a temporary basis, in exchange for some targeted ACA concessions.